Summary
‘Tax Credits: Getting it Wrong?’ (HC 1010) is a Report from the
Parliamentary and Health Service Ombudsman, looking into the Child and Working
Tax Credits system.
The first Report
'Tax
Credits: Putting Things Right’ (HC 124) set out 12 recommendations to
redress some of the problems highlighted. This Report looks at how far those
recommendations have been implemented by HM Revenue Customs (HMRC).
The
Report includes a number of examples of how the impact of a financial support
system which includes a degree of inbuilt financial insecurity can properly
meet the needs of very low income families and earners. HMRC has made a number
of improvements to the administration of the tax credits system, with
considerable improvements in the accessibility and reliability of the advice
and information available to customers in respect of their tax credit claim.
Many of the technical problems affecting significant numbers of cases
have been resolved. Also the complaints handling system has been improved, in
particular the backlogs in both disputed overpayments and compaints. Still, the
number of complaints reported to the Ombudsman Office is high. There is still a
problem with overpayments, with almost a third of all tax credit awards being
overpaid, mostly to people on low or very modest incomes.
Complaints
about the tax system fall into three key groups:
- The design of the
tax system
- A failure in complaints handling
- The unfair and
unreasonable application of COP 26 (overpayment).
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How does it affect me?
If you are a claimant of Child and Working
Tax Credits, this affects you.
The Ombudsman concludes that despite
having put administrative systems in place aimed at enabling HMRC to look at
individual circumstances and hardship issues, opportunities were missed to take
mitigating action, often increasing unnecessary distress and hardship.
Six further recommendations are set out including:
- With a revised
COP 26, HMRC should produce a clear and comprehensive guidance for Tax Credits
Office staff, along with analysis of customer feedback where there are
complaints of an unreasonable application of this code of practice.
- HMRC should adopt a more coordinated approach with regard to overpayments
to tax credit customers.
- Greater consideration should be taken of
individual family circumstances when recovering the tax credit
overpayments.
Find out more about the
Parliamentary and Health
Service Ombudsman
Read more on
Child and Working
Tax Credits